David Joles, Dml - Star TribuneState GOP Chairman Tony Sutton said during a press conference at party headquarters that the GOP says it will file a petition with the state Supreme Court to insure voting precincts properly a process called reconciliation on election night. In this photo:]

The Minnesota Republican Party on Friday was slapped with $30,000 in fines for taking inappropriate campaign contributions from a company created to help pay for the 2010 gubernatorial recount.

After an inquiry that included depositions of a former state Supreme Court chief justice and one of the party's most reclusive major donors, the Minnesota Campaign Finance and Public Disclosure Board found a party awash in sloppy bookkeeping, "out of control" spending and a former chairman who tried to skirt the law.

The board fined former GOP chairman Tony Sutton $3,000, finding his actions "intentional" and noting that "criminal sanctions are available."

Sutton, who has kept a low profile after abruptly resigning from his $100,000-a-year post late last year, issued a statement that said "I am disappointed. ... I disagree with their findings and believe they should have reached a different conclusion."

The board was most critical of the party's dealings with Count Them All Properly Inc., a for-profit company GOP activists formed to handle GOP gubernatorial candidate Tom Emmer's election recount.

After the party was months in arrears on payments, Sutton began telling the attorneys handling the recount to shift their $596,000 in legal bills from the party to Count Them All Properly. He then began raising money for the company to pay the debt, saying in a deposition that the arrangement would have the unique advantage of keeping contributions private.

Dispute over advice

Sutton quickly secured a single donation of $30,000 -- from GOP mega-donor Bob Cummins, who had already given the party $425,000 to help Emmer get elected.

Sutton said GOP lawyers Tony Trimble and Michael Tonor provided advice on how to structure the company and manage its arm's-length relationship with the party.

Tonor and Trimble testified to the board that they never gave any such advice.

With attorneys clamoring for their money, Count Them All Properly made separate $9,000 payments to the firms of Tonor, Trimble and Eric Magnuson, a former Minnesota Supreme Court chief justice hired to represent the GOP during the recount.

The board found Sutton's arrangement with Count Them All Properly to be an intentional way to maneuver around the state's campaign finance reporting laws.

Since the board does not recognize Count Them All Properly as a political committee, its payment of $27,000 in legal fees amounted to an inappropriate and unreported campaign contribution, the board found.

That is the last payment the attorneys received.

Mike Dean, executive director of the watchdog group Common Cause Minnesota, called the GOP's actions a "fundamental attack on trust in our government."

The party "attempted to use a shell corporation to hide over a half million dollars in debt from the public," said Dean, who filed the initial complaint against the GOP and Count Them All Properly.

The board's findings shift the recount debt squarely back to the already cash-strapped Republican Party.

The party has racked up $2 million in debt over the past couple years, a stiff sum as the GOP looks to keep control of the Legislature, mount a credible challenge to Democratic U.S. Sen. Amy Klobuchar and aid presidential candidate Mitt Romney.

Party leaders would not respond to questions about the current debt level.

Earlier this spring, the party's cash-flow problems became so grave that the GOP came within hours of being evicted from its St. Paul headquarters after not paying rent for more than a year.

Significant problems

State party chairman Pat Shortridge tried to downplay the ruling in a brief statement. The board "made official what we at the Republican Party of Minnesota have assumed for some time, that the debts associated with the 2010 gubernatorial recount are debts of the party," he said.

But the board also found significant problems with the party's bookkeeping over the past two years, saying managers hid debt from executive committee members, filed inaccurate reports with the state and left critical and nuanced campaign finance reporting work to managers with little or no experience.

Meanwhile, the party was burning through cash faster than it was taking it in with seemingly no one minding the finances for much of the last two years.

In a deposition, Sutton said he took over day-to-day finances in late 2010. He compared it to a marriage where one spouse doesn't tell the other they withdrew money from the bank and then checks start bouncing. "I was frustrated a little bit because I had raised a ton of money and it wasn't enough to cover things," Sutton told the board. But the financial picture showed little improvement after he took over.

More black eyes?

Amid searing internal criticism, Sutton resigned late last year and Shortridge took over for no salary.

"We have learned from the mistakes of the past and made substantial changes in the way we do business," Shortridge said. Although he would disclose no details about the party's financial standing, Shortridge insisted that "the Republican Party is in much better shape than it was last year, and with the help of our supporters, activists and candidates, it will be even better come November."

But that isn't likely to come without a few more black eyes along the way. Campaign finance officials said they will continue to review the party finances, even as many activists worry that the relentless dribble of bad news will hinder fundraising in a crucial campaign period.

Ramsey County Attorney officials said they are still digesting the board's ruling and will know more next week.

Dean said he will decide next week whether to pursue criminal charges against Sutton. "I think the only way folks are going to learn a lesson is if there are criminal proceedings," Dean said. "It needs to send a message this kind of activity is not OK. This really needs to be a wake-up call for Minnesotans that we need to hold people accountable."

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